How does payroll and the FSS work in Malta?
Employers need a PE number and file an FS5 monthly by the last working day of the following month. The FS7 and FS3 are due by 15 February. Class 1 social security is 10% each from employee and employer, capped at €55.93 a week in 2026.
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Detailed Explanation
## Setting up
Every employer needs a Permission to Employ (PE) number from MTCA before running payroll. Payroll tax and social security both run through the Final Settlement System.
## Monthly and annual filings
The FS5 monthly remittance of withheld tax and social security is due by the last working day of the month following the payroll month. The FS7 annual reconciliation and the FS3 employee statements are due by 15 February.
## Class 1 contributions
In 2026, Class 1 is 10% from the employee and 10% from the employer of basic weekly wage, capped at €55.93 a week each for people born from 1962. Employers also pay a 0.3% Maternity Fund contribution. The Maternity Fund is employer-only.
## Self-occupied
Class 2 is for the self-occupied. It is payable where annual net income exceeds €910 and is capped at €83.89 a week for people born from 1962.
## Company cars
A company car is a taxable fringe benefit under S.L. 123.55, valued by formula. Flag every company car for a benefit calculation.
## What Finn does
Finn tracks the monthly and annual dates, estimates employer cost and reminds you about the PE number before a first hire.
Source: https://legislation.mt/eli/sl/372.14/eng
Real-World Examples
Employee at the cap
For a basic weekly wage of €559.30 or more, the employee and the employer each pay €55.93 a week.
First hire
A company obtains a PE number, runs payroll and files its first FS5 by the last working day of the next month.
Company car
A director receives a company car and the benefit is calculated under S.L. 123.55.
Common Mistakes to Avoid
- Running payroll before holding a PE number
- Deducting the Maternity Fund from the employee
- Missing 15 February for the FS7 and FS3
- Forgetting the fringe benefit on company cars
Frequently Asked Questions
What is a PE number?
A Permission to Employ number from MTCA, needed before payroll.
When is the FS5 due?
By the last working day of the following month.
When are the FS7 and FS3 due?
By 15 February.
What is the 2026 Class 1 cap?
€55.93 a week each for people born from 1962.
Who pays the Maternity Fund?
The employer only, at 0.3%.
Practical Tips
- Get the PE number before the first hire
- Use the last working day, not calendar month end
- Reconcile twelve FS5s before the FS7
- Calculate company car benefits before they start
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